COLORADO · 2019. 2. 19. · 9. Beginning in 2013 and continuing through the 2014, Defendants MVW,...

DISTRICT COURT, PITKIN COUNTY, COLORADO 506 E. Main Street, Suite 300 Aspen, Colorado 81611 ______________________________________________ Plaintiffs: RCHFU, LLC, a Colorado limited liability company, JEFFREY A. BAYER and GAIL L. BAYER, ROBERT BUZZETTI, JULIE C. CANNER, LEE JAMES CHIMERAKIS and THERESA ANN CHIMERAKIS, KEVIN CLARE and NANCY LYNNE SHUTE, TOBY L. CONE TRUST and TOBY L. CONE, its Trustee, RICHARD DAVIS and SHIRLEY J. DAVIS, CARL EICHSTAEDT III, JAMES RICHARD FARQUHAR and JENNIFER LUCILLE FARQUHAR, KOPPELMAN FAMILY TRUST and LARRY KOPPLEMAN, its Trustee, DAVID LANCASHIRE and STEPHEN ANDREWS, DAVID LANCASHIRE, BONNIE LIKOVER, CRAIG LIPTON, JEREMY LOWELL, D.D.S. and LORI LOWELL, EDWARD P. MEYERSON and ANDREA C. MEYERSON, JERRY M. NOWELL TRUST and JERRY M. NOWELL, its Trustee, and DEE ANN DAVIS NOWELL TRUST and AND DEE ANN DAVIS NOWELL, its Trustee, THOMAS M. PROSE REVOCABLE LIVING TRUST and THOMAS M. PROSE, M.D., its Trustee, CASEY M. ROGERS and COURTNEY S. ROGERS, ROBERT A. SKLAR TRUST, AND ROBERT A SKLAR, its Trustee, C. RICHARD STASNEY, M.D. and SUSAN P. STASNEY, C. RICHARD STASNEY, M.D. TSE HOLDINGS, LLC, a Colorado limited liability company, STEPHEN WEINSTEIN and BRENDA WEINSTEIN, JACK ZEMER, on behalf of themselves and all others similarly situated v. Defendants: MARRIOTT VACATIONS WORLDWIDE CORPORATION, a Delaware corporation, MARRIOTT OWNERSHIP RESORTS, INC., d/b/a MARRIOTT VACATION CLUB INTERNATIONAL, a Delaware corporation; ASPEN HIGHLANDS CONDOMINIUM ASSOCIATION, a Colorado non-profit corporation, RITZ-CARLTON

COURT USE ONLY

____________________________

Case Number: 2015 CV 30160

Division: 5

DATE FILED: April 26, 2016 4:51 PM FILING ID: 383AA6159164E CASE NUMBER: 2015CV30160

MANAGEMENT COMPANY, LLC, a Delaware limited liability company, COBALT TRAVEL COMPANY, LLC; INC., a Delaware limited liability company, and THE LION & CROWN TRAVEL CO., LLC, a Delaware limited liability company _____________________________________________ Attorneys for Plaintiffs Michael J. Reiser, # 16161 LAW OFFICE OF MICHAEL J. REISER 961 Ygnacio Valley Road Walnut Creek, CA 94596 Telephone: (925) 256-0400 Facsimile: (925) 476-0304 E-mail: [email protected] Matthew C. Ferguson, A.R. #25687 THE MATTHEW C. FERGUSON LAW FIRM, P.C. 119 South Spring Street, Suite 201 Aspen, Colorado 81611 Telephone: (970) 925-6288 Facsimile: (970) 925-2273 E-mail: [email protected] Michael L. Schrag (Pro Hac Vice to be filed) GIBBS LAW GROUP LLP 1 Kaiser Plaza, Suite 1125 Oakland, CA 94612 Telephone (510) 350-9718 Facsimile: (510) 350-9701 E-mail: [email protected] Tyler R. Meade (CA SBN 160838) (Pro Hac Vice to be filed) THE MEADE FIRM P.C. 1816 Fifth Street Berkeley, CA 94710 Telephone (510) 843-3670 Facsimile: (510) 843-3679 E-mail: [email protected]

FIRST AMENDED AND SUPPLEMENTAL CLASS ACTION COMPLAINT AND JURY

DEMAND

mailto:[email protected]:[email protected]:[email protected]:[email protected]

RCHFU, LLC et al. v. Marriott Vacations Worldwide Corporation et al. Pitkin County District Court Case No. 2015 CV 30160 FIRST AMENDED AND SUPPLEMENTAL CLASS ACTION COMPLAINT AND JURY DEMAND Page 3 of 30

Plaintiffs, as listed in the caption and in paragraphs 13 through 42, infra., by and through their counsel, for their Complaint and Jury Demand, state and allege as follows:

I. INTRODUCTION AND BACKGROUND

1. This lawsuit concerns Defendants’ unlawful acts that decimated the value of deeded 1/12 fractional interests that Plaintiffs and Class Members purchased in the Ritz-Carlton Club Aspen Highlands, located in Aspen, Colorado. Over the last few years, Defendants, including Defendant Marriott Vacations Worldwide Corporation (“MVW”) and its subsidiaries and affiliates, have damaged Plaintiffs and the Class and unjustly enriched themselves by violating (or aiding and abetting in, or conspiring to violate) various fiduciary duties owed by certain Defendants to Class Members. These violations undercut the essential features of the fractional interests sold to Class Members.

2. In the 1980s, Marriott International, Inc. established Defendant Marriott

Ownership Resorts Inc. d.b.a. Marriott Vacation Club International (“MVCI”) to run Marriott’s timeshare operations. MVCI originally sold timeshare in one-week intervals. In 1984, Marriott’s Monarch on Hilton Head Island became the first MVCI resort. By 2009, MCVI had grown to over 400,000 timeshare owners who had purchased one-week interval timeshares.

3. In 1999, MVCI introduced “The Ritz-Carlton Club” (also known as “The Ritz-

Carlton Destination Club”) as a luxury alternative to its “Marriott Vacation Club” timeshare product, which it describes as its “upscale” product line. The Ritz-Carlton Club sold deeded 1/12 fractional ownership interests. The luxury nature, longer use intervals1, and exclusivity distinguished the Ritz Carlton Club fractional interests from MVCI’s “Marriott Vacation Club” product line. Based on these distinctions, The Ritz Carlton Club interests were substantially more expensive.

4. In 2001, the Ritz-Carlton Club, Aspen Highlands was established as the first

fractional ownership property for The Ritz-Carlton Club brand. Thereafter, between 2001 and 2012, Defendants developed and sold approximately 3,200 of the deeded 1/12 luxury fractional interests under The Ritz Carlton Club brand at the following nine locations: Aspen Highlands, Colorado; Bachelor Gulch, Colorado; Jupiter, Florida; North Lake Tahoe, California; St. Thomas, U.S.V.I.; San Francisco, California; Vail, Colorado; Abaco, Bahamas; and Maui, Hawaii.

5. In 2010 MCVI began converting legacy “week owners” of Marriott Vacation

Club timeshares to a “points-based product” wherein purchasers bought interests in a land trust

1 The Ritz-Carlton Club 1/12 fractionals sold at Ritz-Carlton, Aspen Highlands entitled purchasers to 4 weeks of use per year. The other Ritz-Carlton Clubs sold 1/12 fractionals entitling three weeks of use, with the remaining 16 weeks used by members on a “space available” basis. Use of the “space available” weeks was given to members pursuant to the rules established in the Ritz-Carlton Membership Program.


(“MVC Trust”) set up by MVCI to own its resorts. By the end of 2011, many of the Marriott Vacation Club’s over 400,000 owners at over 50 Marriott Vacation Club resorts worldwide were utilizing points purchased from MVCI to trade for use of Marriott Vacation Club resorts. Further, by the end of 2011, Marriott Vacation Club points were available for sale on the secondary market for a fraction of the cost at which MVCI sold them “new.” In addition, Marriott Vacation Club Points were available to “rent” from other members, enabling them to upgrade to stays at more desirable resorts than their “home resorts.”

6. Between 2001 and 2012, approximately 800 Class Members, including

Plaintiffs, paid premium prices, ranging from $200,000 to $400,000, for their deeded 1/12 fractional interest at the Ritz Carlton Club in Aspen Highlands, (known as “Tourist Accommodation Units” or “Fractional Units”). These Fractional Units were sold based on Defendants’ claims that the Fractional Units were superior to MVCI’s other timeshare offerings in that the Ritz Carlton Club Aspen Highlands would be exclusive and operate for the use, benefit and enjoyment of Ritz Carlton Club Members as well as their family and guests “like a second home,” supporting the expensive purchase prices for the Fractional Units as compared to other MVCI timeshare offerings. Defendants further stated that the Fractional Units were transferrable like any other form of deeded real estate.

7. In November 2011, Marriott International, Inc. “spun-off” Defendant MVW as a

separately traded public company (NYSE: VAC), and MVW became the exclusive developer and manager of vacation ownership and related products under the Marriott brand and the exclusive developer of vacation ownership and related products under the Ritz-Carlton brand.

8. In its first Annual Report filed following the spin-off (dated March 21, 2012),

MVW revealed its intent to abandon the upscale Ritz-Carlton product line, stating: “we have significantly scaled back our development of Luxury segment vacation ownership products. We do not have any Luxury segment projects under construction nor do we have any current plans for new luxury development. While we will continue to sell existing Luxury segment vacation ownership products, we also expect to evaluate opportunities for bulk sales of finished inventory and disposition of undeveloped land.”

9. Beginning in 2013 and continuing through the 2014, Defendants MVW, Ritz-

Carlton Management Company, LLC (“RC Management”), The Cobalt Travel Company, LLC (“Cobalt”) and the other Defendants used their complete control over Defendant Aspen Highlands Condominium Association, Inc., (“Association”) as well as their control over the use and operation of Plaintiffs Fractional Units, to eliminate the very features for which Class Members paid premium prices, thereby destroying the value of the Fractional Units sold to Plaintiffs and Class Members. By these actions, and in breach of their fiduciary duties owed as a result of the control maintained over Plaintiffs Fractional Units and the fact that Defendants were agents or sub-agents of Plaintiffs and Class Members, Defendants profited at Plaintiffs and the Class Members’ expense. Even though Defendants actions destroyed the value of the Fractional Units, Plaintiffs and Class Members continue to pay steadily increasing annual dues, compounding the harm. A large percentage of these dues go directly to Defendants in the form


of lucrative “management fees” and other “reimbursements” supposedly incurred by Defendants under the management contracts, including payroll related costs. These management fees and reimbursements are paid solely by Fractional Unit owners at the Ritz Carlton Club Aspen Highlands to the Defendants regardless of usage or occupancy.

10. Due to Defendants’ conduct described herein, the Fractional Units owned by

Plaintiffs and Class Members are now worth less than 20% of the original purchase prices, while, on the other hand, Defendants, including MVW; MVCI; RC Management; Cobalt; and The Lion & Crown Travel Co., LLC (“L&C”) have been unjustly enriched. Due to defendants’ actions, MVC members can now enjoy the benefits and use of the Ritz-Carlton Club Aspen Highlands property for a fraction of the cost that Plaintiffs and Class Members paid. For example, a MVC member can buy (or simply rent) MVC points sufficient to stay at the Ritz Carlton Club Aspen Highlands for approximately twenty percent of what it costs Class Members, who paid $200-400k for substantially similar rights and benefits.

II. JURISDICTION AND VENUE

11. This Court has jurisdiction over the subject matter at issue because this is a civil

action for damages and/or equitable relief. Colo. Const. Art. VI, § 9(1). 12. Venue is proper in this Court under C.R.C.P. 98(a) and (c) as this action arises

from the sale of Fractional Units located in Pitkin County, Colorado, and certain of Defendants’ wrongful and illegal conduct was committed in Pitkin County. In addition, jurisdiction and venue are proper in this court pursuant to the terms of the uniform Purchase Contract and other agreements or instruments executed in connection therewith.

III. PARTIES

A. Plaintiffs

13. Plaintiff RCHFU, LLC is organized under the laws of Colorado. Its only

members, Jennifer Kaplan and Alexander H. Busansky, are citizens of California. Pursuant to a uniform Purchase Contract Ms. Kaplan and Mr. Busansky signed in 2003, they paid $218,500 to the seller Ritz Carlton Development Company and obtained title to Residence Unit No. 12 consisting of an undivided 1/12 interest in Residence No. 8314 of Aspen Highlands Condominiums, according to the Declaration of Condominium for Aspen Highlands Condominiums, recorded January 11, 2001, Reception No. 450454 (referred to herein as “Aspen Highlands Condominiums” or “Ritz Aspen Highlands”).

14. Pursuant to an Assignment of Claims, Ms. Kaplan and Mr. Busansky transferred

all of their claims and all interests in claims arising out of ownership or under the Purchase Contract or otherwise and pertaining to the undivided 1/12 interest in Residence Unit No. 8314 at the Ritz Aspen Highlands to RCHFU, LLC.


15. Plaintiffs Jeffrey A. Bayer and Gail L. Bayer (collectively, the “Bayer Plaintiffs”) are citizens of the State of Alabama. Pursuant to a uniform Purchase Contract signed in 2001, the Bayer Plaintiffs paid $180,000.00 to the seller Ritz Carlton Development Company, and obtained title to Residence Unit No. 9 consisting of an undivided 1/12 interest in Residence No. 8308 of the Aspen Highlands Condominiums.

16. Plaintiff Robert Buzzetti is a citizen of the State of Florida. Pursuant to a uniform Purchase Contract signed in 2002, Mr. Buzzetti paid $320,000.00 to the seller Ritz Carlton Development Company, and obtained title to Residence Unit No. 4 consisting of an undivided 1/12 interest in Residence No. 8203 of the Aspen Highlands Condominiums.

17. Plaintiff Julie C. Canner is a citizen of the State of Michigan. Pursuant to a

uniform Purchase Contract signed in 2001, Ms. Canner paid $170,000.00 to the seller Ritz Carlton Development Company, and obtained title to Residence Unit No. 13 consisting of an undivided 1/12 interest in Residence No. 8402 of the Aspen Highlands Condominiums.

18. Plaintiffs Lee James Chimerakis and Theresa Ann Chimerakis (collectively,

the “Chimerakis Plaintiffs”) are citizens of the State of Florida. Pursuant to a uniform Purchase Contract signed in 2008, the Chimerakis Plaintiffs paid $310,000.00 to the seller Ritz Carlton Development Company, and obtained title to Residence Unit No. 5 consisting of an undivided 1/12 interest in Residence No. 2405 of the Aspen Highlands Condominiums.

19. Plaintiffs Kevin Clare and Nancy Lynne Shute (collectively, the “Clare

Plaintiffs”)are citizens of the State of California. Pursuant to a uniform Purchase Contract signed in 2005, the Clare Plaintiffs paid $266,000.00 to the seller Ritz Carlton Development Company, and obtained title to Residence Unit No. 5 consisting of an undivided 1/12 interest in Residence No. 2206 of the Aspen Highlands Condominiums.

20. Plaintiffs Toby L. Cone Trustee is a citizen of the State of Connecticut and

Trustee of the Toby L. Cone Trust (collectively, the “Cone Plaintiffs”). Pursuant to a uniform Purchase Contract signed in 2003, the Cone Plaintiffs paid $220,000.00 to the seller Ritz Carlton Development Company, and obtained title to Residence Unit No. 10 consisting of an undivided 1/12 interest in Residence No. 8406 of the Aspen Highlands Condominiums.

21. Plaintiffs Richard Davis and Shirley J. Davis (collectively, the “Davis

Plaintiffs”) are citizens of the State of Texas. Pursuant to a uniform Purchase Contract signed in 2002, the Davis Plaintiffs paid $290,000.00 to the seller Ritz Carlton Development Company, and obtained title to Residence Unit No. 10 consisting of an undivided 1/12 interest in Residence No. 8105 of the Aspen Highlands Condominiums.

22. Plaintiff Carl Eichstaedt III is a citizen of the State of California Pursuant to a

uniform Purchase Contract signed in 2004, the Eichstaedt Plaintiff paid $238,000.00 to the seller Ritz Carlton Development Company, and obtained title to Residence Unit No. 7 consisting of an undivided 1/12 interest in Residence No. 2204 of the Aspen Highlands Condominiums.


23. Plaintiffs James Richard Farquhar and Jennifer Lucille Farquhar are citizens

of Australia. Pursuant to a uniform Purchase Contract signed in 2008, the Farquhar Plaintiffs paid $210,000.00 to the seller Ritz Carlton Development Company, and obtained title to Residence Unit No. 5 consisting of an undivided 1/12 interest in Residence No. 2302 of the Aspen Highlands Condominiums.

24. Plaintiff Larry Koppleman is a citizen of the State of California and Trustee of

the Koppleman Family Trust (collectively, the “Koppleman Plaintiffs”). Pursuant to a uniform Purchase Contract signed in 2001, the Koppleman Plaintiffs paid $310,000.00 to the seller Ritz Carlton Development Company and obtained title to Residence Unit No. 6 consisting of an undivided 1/12 interest in Residence No. 8205 of the Aspen Highlands Condominiums.

25. Additionally, pursuant to a uniform Purchase Contract signed in 2001, the

Koppleman Plaintiffs paid $171,000.00 to the seller Ritz Carlton Development Company and obtained title to Residence Unit No. 1 consisting of an undivided 1/12 interest in Residence No. 8404 of the Aspen Highlands Condominiums.

26. Additionally, pursuant to a uniform Purchase Contract signed in 2002, the

Koppleman Plaintiffs paid $295,000.00 to the seller Ritz Carlton Development Company and obtained title to Residence Unit No. 2 consisting of an undivided 1/12 interest in Residence No. 8305 of the Aspen Highlands Condominiums.

27. Plaintiffs David Lancashire and Stephen Andrews (collectively,

“Lancashire/Andrews”) are citizens of the State of Texas. Pursuant to a uniform Purchase Contract signed in 2003, Lancashire/Andrews paid $200,000 to the seller Ritz Carlton Development Company and obtained title to Residence Unit No. 6 consisting of an undivided 1/12 interest in Residence No. 8403 of the Aspen Highlands Condominiums.

28. Plaintiff David Lancashire is a citizen of the State of Texas. Pursuant to a

uniform Purchase Contract signed in 2008, Mr. Lancashire paid $230,000 to the seller Ritz Carlton Development Company and obtained title to Residence Unit No. 4 consisting of an undivided 1/12 interest in Residence No. 8105 of the Aspen Highlands Condominiums.

29. Plaintiff Bonnie Likover is a citizen of the State of Texas. Pursuant to a uniform

Purchase Contract signed in 2008, Ms Likover paid $173,500.00 to the seller Ritz Carlton Development Company and obtained title to Residence Unit No. 12 consisting of an undivided 1/12 interest in Residence No. 8202 of the Aspen Highlands Condominiums.

30. Plaintiff Craig Lipton is a citizen of the State of California. Pursuant to a

uniform Purchase Contract signed in 2007, Mr. Lipton paid $180,000.00 to the seller Ritz Carlton Development Company, and obtained title to Residence Unit No. 7 consisting of an undivided 1/12 interest in Residence No. 8311 of the Aspen Highlands Condominiums.


31. Plaintiffs Jeremy Lowell, D.D.S. and Lori Lowell (collectively, the “Lowell Plaintiffs”) are citizens of the State of Colorado. Pursuant to a uniform Purchase Contract signed in 2005, the Lowell Plaintiffs paid $250,000.00 to the seller Ritz Carlton Development Company, and obtained title to Residence Unit No. 9 consisting of an undivided 1/12 interest in Residence No. 2204 of the Aspen Highlands Condominiums.

32. Plaintiffs Edward P. Meyerson and Andrea C. Meyerson (collectively, the

“Meyerson Plaintiffs”) are citizens of the State of Alabama. Pursuant to a uniform Purchase Contract signed in 2004, the Meyerson Plaintiffs paid $234,000.00 to the seller Ritz Carlton Development Company and obtained title to Residence Unit No. 12 consisting of an undivided 1/12 interest in Residence No. 8302 of the Aspen Highlands Condominiums.

33. Plaintiffs Jerry M. Nowell and Dee Ann Davis Nowell are citizens of the State

of Arizona and as Trustees of the Jerry M. Nowell Trust and the Dee Ann Davis Nowell Trust, respectively (collectively, the “Nowell Plaintiffs”). Pursuant to a uniform Purchase Contract signed in 2004, the Nowell Plaintiffs paid $210,000.00 to the seller Ritz Carlton Development Company, and obtained title to Residence Unit No. 10 consisting of an undivided 1/12 interest in Residence No. 8106 of the Aspen Highlands Condominiums.

34. Plaintiff Thomas M. Prose, M.D. is a citizen of the State of Michigan and

Trustee of the Thomas M. Prose Revocable Living Trust, (collectively, the “Prose Plaintiffs”). Pursuant to a uniform Purchase Contract signed in 2008, the Prose Plaintiffs paid $369,000.00 to the seller Ritz Carlton Development Company, and obtained title to two undivided 1/12 interests in Residence No. 2401 of the Aspen Highlands Condominiums. The interests are described in weeks.

35. Additionally, pursuant to a uniform Purchase Contract signed in 2009, the Prose

Plaintiffs paid $120,650.00 to the seller Ritz Carlton Development Company, and obtained title to an undivided 1/12 interest in Residence No. 2304 of the Aspen Highlands Condominiums. The interest is described in weeks.

36. Plaintiffs Case M. Rogers and Courtney S. Rogers are citizens of the State of

North Carolina. Pursuant to a uniform Purchase Contract signed in 2003, the Rogers Plaintiffs paid $220,000.00 to the seller Ritz Carlton Development Company, and obtained title to Residence Unit No. 4 consisting of an undivided 1/12 interest in Residence No. 8106 of the Aspen Highlands Condominiums.

37. Plaintiff Robert A. Sklar is a citizen of the State of Michigan and Trustee of the

Robert A. Sklar Trust (collectively, the “Sklar Plaintiffs”). Pursuant to a uniform Purchase Contract signed in 2012, Mr. Sklar paid $80,000.00 to the seller Ritz Carlton Development Company, and obtained title to Residence Unit No. 10 consisting of an undivided 1/12 interest in Residence No. 8204 of the Aspen Highlands Condominiums.


38. Plaintiffs C. Richard Stasney and Susan P. Stasney (collectively, the “Stasney Plaintiffs”) are citizens of the State of Texas. Pursuant to a uniform Purchase Contract signed in 2001, the Stasney Plaintiffs paid $300,000.00 to the seller Ritz Carlton Development Company and obtained title to Residence Unit No. 11 consisting of an undivided 1/12 interest in Residence No. 8205 of Aspen Highlands Condominiums.

39. Additionally, pursuant to a uniform Purchase Contract signed in 2011, C. Richard Stasney paid $261,000.00 to the seller Ritz Carlton Development Company and obtained title to an undivided 1/12 interest in Residence No. 2305 of the Aspen Highlands Condominiums. The interest is described in weeks.

40. Plaintiff TSE Holding, LLC, is a Colorado limited liability company, in good

standing. Thomas Engelman is a citizen of the State of Colorado and a manager and member. TSE Holding, LLC paid $11,000.00 on the secondary market to purchase and obtain title of an undivided 1/12 interest in Residence No. 2304 of the Aspen Highlands Condominiums. The interest is described in weeks.

41. Plaintiffs Stephen Weinstein and Brenda Weinstein (collectively, the

“Weinstein Plaintiffs”) are citizens of the State of Florida. Pursuant to a uniform Purchase Contract signed in 2005, the Weinstein Plaintiffs paid $227,000.00 to the seller Ritz Carlton Development Company and obtained title to Residence Unit No. 11 consisting of an undivided 1/12 interest in Residence No. 8314 of Aspen Highlands Condominiums.

42. Plaintiff Jack Zemer is a citizen of the State of California. Pursuant to a uniform

Purchase Contract signed in 2001, Mr. Zemer paid $230,000.00 to the seller Ritz Carlton Development Company, and obtained title to Residence Unit No. 11 consisting of an undivided 1/12 interest in Residence No. 8405 of Aspen Highlands Condominiums.

B. Defendants

43. Defendant Marriott Vacations Worldwide Corporation (“MVW”) is a publicly

traded Delaware corporation with its principal place of business at 6649 Westwood Boulevard, Orlando, Florida. MVW is the parent and/or an affiliate company of the other Defendants and was involved in and responsible for the wrongful conduct alleged herein. Marriott Vacations Worldwide Corporation is sometimes referred to herein as Marriott.

44. Defendant Marriott Ownership Resorts, Inc., d.b.a. Marriott Vacation Club

International (“MVCI”) is a Delaware corporation, and a wholly owned subsidiary of Marriott. Its principal place of business is at 6649 Westwood Boulevard, Orlando, Florida, and it is authorized to do business in Colorado. MVCI was involved in and responsible for the wrongful conduct alleged herein.


45. Defendant Aspen Highlands Condominium Association, Inc. (“Association”) is a Colorado non-profit corporation that serves as the official “Owners Association” for buyers of Fractional Units, including Class Members.

46. Defendant Ritz-Carlton Management Company, LLC (“RC Management”) is

another wholly owned MVW subsidiary, and a Delaware limited liability company. Defendant RC Management has a principal place of business at 6649 Westwood Boulevard, Suite 500, Orlando, Florida, and is authorized to do business in Colorado.

47. Defendant The Cobalt Travel Company, LLC (“Cobalt”) (formerly known as

the Ritz-Carlton Travel Company, LLC) is a Delaware limited liability company, has a principal place of business at 6649 Westwood Boulevard, Suite 500, Orlando, Florida, and is authorized to do business in Colorado.

48. Defendant The Lion & Crown Travel Co., LLC (“L&C”) is a Delaware limited

liability company formed in 2008 and is authorized to do business in Colorado. L&C is a wholly owned subsidiary of RC Development.

IV. SOURCE OF FIDUCIARY DUTIES

49. There are multiple sources of fiduciary duties arising out of the documents

governing the management, operation and use of the Ritz-Carlton Club, Aspen Highlands, including the Articles of Incorporation of Aspen Highlands Condominium Association, Inc., (“Articles”), the Declaration of Condominium for Aspen Highlands Condominium (“Declaration”), The Ritz-Carleton Management Company, LLC Management Agreement (Management Agreement), and the Ritz-Carlton Club Membership Program Affiliation Agreement, (“Affiliation Agreement”).

A. Aspen Highlands Condominium Association

50. The Association was created on December 9, 1999 upon filing with the Colorado Secretary of State the Articles of Incorporation of Aspen Highlands Condominium Association, Inc. Amended and Restated Articles of Incorporation of Aspen Highlands Condominium Association, Inc. were filed with the Colorado Secretary of State on November 2, 2000.

51. According to the Amended Articles: “The primary purpose for which the

Association is organized is to manage, administer, operate and maintain” the Aspen Highlands Condominiums.

52. Pursuant to Article V. of the Articles, the powers of the Association, include: “To

operate, manage, administer, insure, repair, replace, reconstruct and improve the Condominium” (Article 5.1); “To operate, manage and administer the Plan of Fractional Ownership that may be created in the Condominium by the Declarant” (Article 5.2); “To contract for the management of the Condominium and to delegate to such contractor all powers and duties of the Association


except such as are specifically required by the various Association Documents or Colorado law to have approval of the board of directors or the members of the Association” (Article 5.7); and, “To enter into agreements providing for the participation of Owners of Fractional Interests in those units committed to a Plan of Fractional Ownership in an exchange system or network of resorts allowing for reciprocal use of resort properties by owners of fractional ownership interests in the Condominium” (Article 5.11).

53. Defendant Association owed and owes fiduciary duties to buyers of Fractional

Units, including Plaintiffs and Class Members, including but not limited to a duty of loyalty and duty to enforce restrictive covenants set forth in the Declaration of Condominium for Aspen Highlands Condominiums.2 The scope of this fiduciary duty extends beyond the norm for condominium associations based on the delegation and assumption of authority over not just the common areas, but also the fractional units themselves.

B. Ritz-Carlton Management Company 54. On January 12, 2001, Defendants Association and RC Management, entered into

a written agreement, designated “Management Agreement.” Pursuant to paragraph 2, captioned “Appointment and Acceptance of Agency,” the Association employed RC Management “to act on behalf of the Association and its members as the exclusive managing entity and to manage the daily affairs of the Condominium and the (Fractional Ownership Interest) Plan, and (RC Management) hereby agrees to so act.” (Emphasis added.) A copy of the Management Agreement is attached hereto as EXHIBIT A.

55. Pursuant to paragraph 4 of the Management Agreement, captioned “Delegation of Authority,” Association delegates to RC Management “all of the power and authority of (Association) to the extent necessary to perform (RC Management’s) duties and obligations under this agreement.” In addition, paragraph 4 provides: “(RC Management), on behalf of and at the expense of (Association), to the exclusion of all other persons including the (Association) and its members, shall have all the powers and duties of the Executive Board as set forth in the Declaration and the bylaws of the (Association) (except such thereof as are specifically required to be exercised by its directors or members), and it shall perform, by way of illustration and not limitation, (the services set forth in paragraphs 4(A) through 4(V) . . . .” (Emphasis Added.)

56. Paragraph 4(A) of the Management Agreement provides RC Management with

the exclusive authority to “Hire, pay, supervise and discharge all persons necessary to be employed in order to properly manage, maintain, administer and operate the Condominium and (Fractional Ownership Interest) Plan.”

2 See, Woodward v. Board of Directors of Tamarron Association of Condominium Owners, Inc., 155 P.3d 621,624 (Colo. App. 2007); Colorado Homes, Ltd. v. Loerch-Wilson, 43 P.3d 718, 722 (Colo. App. 2001).


57. Paragraph 4(F) of the Management Agreement provides RC Management with the exclusive authority to “Maintain the (Association’s) financial record book, accounts and other records, and as necessary, issue certificate of account to Owners and their Mortgagees . . . .”

58. Paragraph 4(H) of the Management Agreement provides RC Management with

the exclusive authority to “Prepare the itemized annual budget for the (Association) or revisions to the budget, or a combination thereof, (that RC Management) determines necessary for submission to the Executive Board.”

59. Paragraph 4(I) of the Management Agreement provides RC Management with the

“authority and responsibility to maintain and replace the personal property within the Common Elements and the (Fractional Units), and to determine the maintenance fee, proration of taxes, and other common expenses applicable to those Common Elements and (Fractional Units), as defined in and provided for in the Declaration.

60. Paragraph 4(J) of the Management Agreement provides RC Management with the

exclusive authority to “Receive and deposit all funds collected from the Owners, or otherwise accruing to the Association, in a special account or accounts of (RC Management) . . . .”

61. Paragraph 4(L) of the Management Agreement provides RC Management “shall

have sole authority to promulgate and amend rules and regulations for the (Fractional Units) and Limited Common Elements of the (Fractional Units) subject to the (Fractional Unit) Directors to revise, repeal or modify such amended rules and regulations and subject to the provisions of the Declaration.”

62. Paragraph 4(N) of the Management Agreement provides RC Management with

the authority to “Retain and employ such professionals and such experts whose services may be reasonably required to effectively perform its duties and exercise its powers hereunder, and to employ same on such basis as it deems appropriate.”

63. Perhaps most importantly, Paragraph 4(S) of the Management Agreement

provides RC Management with the authority to “Engage a Program Manager through an affiliation agreement, who shall manage and administer the reservation procedures and exchange program for the Ritz-Carlton Club Membership Program (the ‘Membership Program’) through which Owners of Residence Interests reserve the use of accommodations at a Club as defined in and pursuant to The Ritz-Carlton Club Membership Program Reservation Procedures (‘Reservation Procedures’). The Program Manager shall have the broadest possible delegation of authority regarding administration of the Reservation Procedures . . . . RC Management on behalf of (the Association shall assess the Owners of (Fractional Units) the reasonable cost (as determined by the Program Manager) of operating such Reservation Procedures, which cost shall be included as part of Club dues.”


64. Paragraph 14 of the Management Agreement provides that RC Management “shall receive an annual net fee, free from charges and expenses” of Six Hundred Dollars ($600) per Residence Interest from the Owners of the (Fractional Units) . . .”

65. Based upon these and other terms of the Management Agreement and also by

operation of law, RC Management is the agent of the Association and Fractional Unit Owners, including Plaintiffs and Class Members, and as such, owes the Association, Plaintiffs and Class Members fiduciary duties, including the duties of loyalty, avoiding self-dealing, and to enforce the restrictive covenants set forth in the Declaration of Condominium for Aspen Highlands. These fiduciary duties also flow from the fact RC Management was given control over the Fractional Units.

66. Based upon the high degree of control over Plaintiffs’ and class members’

Fractional Units arising from its authority as set forth in the Management Agreement, RC Management owes Plaintiffs and Class Members fiduciary duties, including a duty of loyalty, duty to avoid self-dealing, and duty to enforce the restrictive covenants set forth in the Declaration of Condominium for Aspen Highlands.

C. The Cobalt Travel Company 67. Defendant Cobalt entered into a four party agreement titled “The Ritz-Carlton

Club Membership Program Affiliation Agreement” (“Affiliation Agreement”) with the Ritz-Carlton Development Company (“RC Development”) (the seller of the fractional interests at issue, a wholly owned subsidiary of MVW, and the sole manager and member of Defendants RC Management and Cobalt) and Defendants RC Management and the Association. Pursuant to the Affiliation Agreement, the Ritz-Carlton Club, Aspen Highlands and the purchasers of Fractional Units including Plaintiffs and Class Members, became affiliated with and members of the Ritz-Carlton Membership Program.

68. Paragraph 1.2 of the Affiliation Agreement provided: “By acceptance of a

conveyance of a Residence Interest at the Club . . . each Member is deemed to have consented to the terms and conditions of this Agreement and to have further consented to the appointment of the Members Association as the authorized representative to act on behalf of the Members with respect to the provisions of this Agreement. Whenever the Members Association’s acknowledgment, consent, understanding and/or agreement is stated or implied in this Agreement, such acknowledgment, consent, understanding and/or agreement shall be deemed to also have been given by the Board of Directors, if applicable, and each Member.

69. Pursuant to the terms of the Affiliation Agreement, Defendant Cobalt is the

Program Manager of the Ritz-Carlton Club Membership Program and also operates the reservation system through which Class Members obtain use of their allotted number of days at the Ritz Aspen Highlands and obtain access to the sister Ritz-Carlton Destination Clubs in the Ritz-Carlton Club Membership Program. The Affiliation Agreement provides: “The Program Manager may, in its sole discretion, elect to affiliate other locations with the Membership


Program as Member Clubs or Associated Clubs from time to time. Neither the Developer, Members Association, nor Club Manager shall be entitled to participate in or consent to the Program Manager’s decision in this regard.” (Emphasis added.) A copy of the Affiliation Agreement is attached hereto as EXHIBIT B.

70. Based upon the terms of the Management Agreement and the Affiliation

Agreement, Cobalt is the agent or subagent of the Association and Fractional Unit owners, including Plaintiffs and Class Members, and as such, owes the Association, Plaintiffs and Class Members fiduciary duties, including a duty of loyalty and duty to avoid self-dealing.

71. Based upon the high degree of control over Plaintiffs’ and Class Members’

Fractional Units arising from its authority as set forth in the Affiliation Agreement, Cobalt owes Plaintiffs and Class Members fiduciary duties, including a duty of loyalty and duty to avoid self-dealing.

72. As described herein, Defendant Cobalt, in violation of its fiduciary duties to

Plaintiffs and Class Members, and aided and abetted in said fiduciary duty violations by the other Defendants, entered into an Affiliation Agreement with L&C, which allows some or all of the over 400,000 members of Defendant MVW’s Marriott Vacation Club who are able to acquire sufficient points in the Marriott Vacation Club Destinations system, to use the Fractional Units at the Ritz-Aspen Highlands. These breaches of fiduciary duty caused a great diminution in the value of Plaintiffs and Class Members’ Fractional Units, and unjustly enriched the other Defendants, including MVW, MVCI, RC Management and Cobalt at the expense of Plaintiffs and Class Members.

73. MVW directly, and indirectly through wholly owned subsidiaries, exerted control

over Ritz-Carlton Club, Aspen Highlands and the other Defendants, because, inter alia: 1) MVW’s lawyers drafted the Management Agreement that provided its wholly owned subsidiary, RC Management full control of the operation of the Association and the Association Board at the Ritz-Carlton Club, Aspen Highlands; 2) RC Management and Cobalt were shell companies serviced by persons technically employed by MVW and/or MVCI; 3) the costs and revenues generated in connection with Ritz-Carlton Club, Aspen Highlands by MVW, MVCI, RC Management and Cobalt were accounted for in MVW’s consolidated financials; 4) employees providing services to MVCI, RC Management, and Cobalt were treated as MVW employees.

74. Each and all of the Defendants (directly and/or indirectly through individual

agents, representatives, employees, principals, officers, directors and members) (a) actively or passively participated in the conduct, acts and omissions alleged herein, (b) materially assisted, aided, abetted and/or conspired with one or more other Defendants in committing the conduct, acts, and omissions alleged herein, (c) purposely, knowingly, recklessly, or negligently planned, directed, implemented, furthered, and/or consented to conduct, acts and omissions alleged herein, and/or (d) is directly, vicariously, jointly, and/or severally liable for the conduct, acts, and omissions alleged herein.


75. Each of the Defendants are (a) are the agents, representatives, alter egos, and/or instrumentalities of their respective principals or controlling entities, (b) have interlocking or overlapping directors and/or officers with their respective principals or controlling entities, (c) are undercapitalized and/or spurious or disregarded corporate form, (d) and for which “piercing the corporate veil” is or may be necessary and appropriate to prevent injustice and inequity to Plaintiffs and Class Members.

76. On July 17, 2012, Ms. Eveleen Babich, General Manager of Defendant Cobalt

wrote Plaintiffs and Class Members a letter (on Ritz Carlton Destination Club letterhead), stating that “Based on the Ritz-Carlton Destination Club member feedback, additional benefits and experiences will be available through a new affiliation with Marriott Vacation Club Destinations . . . Affiliation will extend to you the opportunity to deposit your Reserved Allocation on an annual basis. Once you deposit, the following will be available for you: . . . Secure any of the 51 worldwide Marriott Vacation Club Resorts . . .” A copy of the July 17, 2012 Letter from Eveleen Babich is attached hereto as EXHIBIT C.

77. Eveleen Babich’s July 17, 2012 letter did not specify whether this proposed

affiliation would allow the 400,000 Marriott Vacation Club members to access the Ritz Carlton Club locations and in fact assured Class Members that “nothing about the Home Club Membership…has changed” as a result of this affiliation.

78. This announcement proposing a new affiliation agreement with Defendant

MVW’s Marriott Vacations Club Destinations program generated extreme concern amongst the various “member controlled” Boards of Directors of the various Ritz-Carlton Destination Clubs. For instance, in a letter dated August 3, 2012, the Association Board of the Ritz Carlton Club-St. Thomas wrote to its members:

We have been in frequent communications with each other and the Presidents of the other RCDC Clubs since this announcement. Our general but preliminary consensus regarding the ‘evolution’ of the RCDC brand as described in Eveleen Babich’s letter of July 17th is that we are concerned that this may not be an enhancement to our Membership Interests. We all, as members, invested in the Ritz-Carlton brand!

A copy of the August 3, 2012 Letter from the association board of the Ritz Carlton Club-St. Thomas is attached hereto as EXHIBIT D.

79. On August 10, 2012, the Association Board of the Ritz Carlton Club-Jupiter wrote

to its members:

We were disappointed as to how Ritz Carlton, Marriott Vacations Worldwide Corporation and Cobalt Travel Company, LLC (‘RCDC Parties’) separately and collectively chose to characterize these matters they have defined as the “evolution of the RCDC brand.” No input from


your Board of Directors or, to our knowledge, any of the other RCDC Club Boards was ever solicited by these companies while they determined these significant changes to the RCDC system in which we all own a Membership Interest.

A copy of the August 10, 2012 Letter from the association board of the Ritz

Carlton Club-St. Thomas is attached hereto as EXHIBIT E.3 80. On August 17, 2012, Lee Cunningham, the Executive Vice President and Chief

Operating Officer of Defendant MVCW, wrote a letter (on Ritz Carlton Destination Club letterhead) to all Ritz Carlton Destination Club Members, including Class Members, “to provide you further information regarding certain changes announced on July 17th to the Lion and Crown Travel Company and The Ritz-Carlton Destination Club system” and to assure the Ritz-Carlton Vacation Club members that “nothing… has changed or will change as a result of the announcement.” The August 17th notice also stated that the original affiliation notice on July 17th had generated questions from the members, which would be addressed in an upcoming Webinar on August 28, 2012. A copy of the August 17, 2012 Letter from Lee Cunningham is attached hereto as EXHIBIT F.

81. In the meantime, Defendant Association wrote a letter to Plaintiffs and Class

Members on August 17, 2012, notifying them that the Association board was working with MVW executives to better understand the proposed affiliation. The letter states that “[f]rankly, it has been our position that our members bought into a Ritz-Carlton brand and do not want that brand diluted. The Board has concerns that … the nature of our club will change by opening the club to MVW timeshare/points members who have a much lower cost of entry.”

82. The August 17th letter from the Association states that “[t]he Board is also

concerned that there are specific provisions in our Association documents which the Board believes does not permit MVW to conduct a separate program as they currently intend.” A copy of the August 17, 2012 Letter from the Association is attached hereto as EXHIBIT G.

83. One of the provisions that the Association was referring to is Section 19.8 of the

Declaration of Condominium for Aspen Highlands Condominiums, entitled “Limit on Timesharing,” which states as follows:

Each Owner acknowledges that Declarant intends to create Fractional Ownership Interests with respect to Tourist Accommodation Units within Aspen Highlands Condominiums and Aspen Highlands Village. Other

3 Ultimately the announced intention to affiliate the Marriot Vacation Club Destinations program, with its over 400,000 members, caused the Condominium Association Boards of Ritz-Bachelor Gulch and Ritz-Jupiter Clubs to put a vote to their members as to whether to terminate their management agreements with RC Management and Cobalt. In 2013 and 2014, respectively, both of these clubs’ memberships voted to terminate the management agreements with Defendant RC Management, and both clubs have since left the system.


than the right of Declarant” (sic) or a Successor Declarant and their respective officers, agents, employees, and assigns to create Fractional Ownership Interests in accordance with Article 23 of this Declaration (specifically including, without limitation, the Plan of Fractional Ownership), no Unit shall be used for the operation of a timesharing, fraction-sharing, interval ownership, private residence club, membership program, vacation club, exchange network or system or similar program whereby the right to exclusive use of the Unit is alternated or scheduled among participants in the program on a fixed or floating time schedule over a period of years whether by written, recorded agreement or otherwise. (Emphasis added.)

A copy of the Declaration of Condominium for Aspen Highlands Condominiums is attached hereto as EXHIBIT H.4

84. On August 30, 2012, the Ritz-Carlton Destination Club released a new “Frequently Asked Questions for Members” pamphlet to Plaintiffs and Class Members, which stated that “Marriott Vacations Worldwide intends to sell most of its remaining unsold Ritz-Carlton Club inventory through the Marriott Vacation Club Destinations program.”5 A copy of the August 30, 2012 pamphlet “Frequently Asked Questions for Members” is attached hereto as EXHIBIT I.

85. The August 30, 2012 “Frequently Asked Questions for Members” also states:

“Given the current state of the luxury fractional market and the market’s unlikely recovery in the near term, selling this inventory through the Marriott Vacation Club Destinations program relieves the significant financial burden of this unsold inventory in a balanced way . . .” and “Marriott Vacations Worldwide is paying club dues on these unsold fractions in excess of eleven million dollars a year, plus continues to subsidize the operating costs at a number of clubs for an additional four million dollars a year.”

86. On October 2, 2012, the Association issued another letter to Plaintiffs and Class Members that purported to update them on the discussions with MVW on this pressing issue. The letter revealed, inter alia, that “MVW has been advised that it is the view of the Board and its counsel, that in order for MVW to move towards the points based system it is planning on, that the underlying Association documents would need to be revised as it is in our view that the documents prohibit what MVW is planning.” A copy of the October 2, 2012 Letter from the Association is attached hereto as EXHIBIT J. (Emphasis added.)

4 The Declaration for Aspen Highlands Village which created the “Master Association”, and which also govern the Class Members’ Fractional Units, sets forth a similar use restriction, labeled “No Timeshare” at Section 8.25. 5 The August 28, 2012 pamphlet stated: “Marriott Vacations Worldwide is paying club dues on these unsold fractions in excess of eleven million dollars a year, plus continues to subsidize the operating costs at a number of clubs for an additional four million dollars a year.”


87. While the Association was conducting its discussions with MVW, on November 5, 2012, the President of the Board of the Ritz-Carlton Club, Bachelor Gulch, Michael Mullenix, wrote a letter to Mr. Steven Weisz, President and CEO of MVW and Lee Cunningham, Executive Vice President and COO of MVW, stating:

I am writing on behalf of the Board of Directors to continue our dialogue about the proposed affiliation of Ritz Carlton Bachelor Gulch Members with Lion and Crown in 2013 and beyond and to request that such proposed affiliation be canceled. At a minimum, the proposed affiliation should be delayed until January 1, 2014 and the status quo maintained until that time . . . The Board and membership of the Club have serious concerns that the Club’s affiliation with Lion and Crown is contrary to the Club’s governing documents and, in any event, will have permanent negative impacts on the club, including most importantly to the value of our residence units…

88. The letter from the Board of the Ritz-Bachelor Club, Gulch to Steven Weisz and

Lee Cunningham ended as follows: “Please advise no later than Thursday, November 15, 2012, whether MVW will agree to this requested delay of affiliation. If MVW will not voluntarily agree to this delay and insists on permitting affiliation with Lion and Crown now, the Board may have no alternative but to enforce the Club Declarations prohibition on timesharing through formal legal action. We do not believe that should be necessary given our aligned interests on this issue.” A copy of the November 5, 2012 Letter from the Board of the Ritz-Bachelor Gulch to Steven Weisz and Lee Cunningham is attached hereto as EXHIBIT K.

89. Between April 5, 2013 and April 8, 2013, the Association wrote letters to all

Plaintiffs and Class Members that:

Positive discussions were held today between the Board of Directors and representatives of the Ritz/Marriott including Lee Cunningham, COO of the Ritz-Carlton Destination Club. Ritz Marriott representatives agree that unless a majority of Aspen Highlands Members (excluding the Marriott interests and Members not in good standing) vote in favor of doing so, Ritz/Marriott will not include Aspen Highlands in the Marriott Vacation Club affiliation/exchange/point program. Discussions continue on other important issues affecting Aspen Highlands, including alternatives for divesting the current inventory of Aspen Highlands units owned by Ritz/Marriott. Such inventory will not be sold through the Marriott Vacation Club trust without an additional vote of the Members.

Copies of letters dated April 5, 2013 and April 8, 2013 from the Association to Class Members are attached hereto as EXHIBIT L. (Emphasis added)


90. No vote of the Members of Ritz-Aspen Highlands, including by Plaintiffs or Class Members, in favor of allowing the Defendants to include Ritz-Aspen Highlands in the Marriott Vacation Club affiliation/exchange/point program ever occurred. Likewise, no vote of the Members of Ritz-Aspen Highlands in favor of allowing the Defendants to sell their unsold inventory of Aspen Highlands units through the Marriott Vacation Club trust ever occurred.

91. However, in April 2014, Defendant Association, acting in concert with and/or

aided and abetted by the other Defendants, including MVW, RC Management, and Cobalt, unilaterally decided to include the Ritz-Carlton Club, Aspen Highlands Fractional Plan in the Marriott Vacation Club affiliation/exchange/points program; and agreed and conspired with Defendants to have the Association breach its fiduciary duties to Plaintiffs and Class Members by, inter alia, 1) agreeing to act and acting in a disloyal manner towards Plaintiffs and Class Members by favoring the interests of the Defendants over the interests of the Plaintiffs and Class Members by including the Ritz-Carlton Club, Aspen Highlands Fractional Plan in the Marriott Vacation Club affiliation/exchange/points program; and 2) agreeing not to and/or failing to enforce the Declaration, including the covenant against further timesharing, as set forth in paragraph 19.8 of the Declaration.

92. In April 2014, the Association wrote a letter to all Plaintiffs and Class Members

updating them on “your Board of Directors’ efforts on your behalf . . .” On page 2 of the letter, the Board dropped a bombshell under the heading “Marriott Vacation Club Destination Exchange Program: In response to the Members’ wishes - both past and present, the Board has crafted a very unique program which would allow Aspen Club Members to exchange a week of their reserved allocated time for points within the Marriott Vacation Club Destinations exchange program.” A copy of the April 2014 Letter from the Association to Plaintiffs and Class Members is attached hereto as EXHIBIT M.

93. Plaintiffs allege that sometime in 2014, in contravention of the promises made to

Class Members on April 5 and April 8, 2013 (that unless a majority of Aspen Highlands Members vote in favor of doing so, Ritz/Marriott will not include Aspen Highlands in the Marriott Vacation Club affiliation/exchange/point program), Defendants MVW, RC Management and Cobalt, pursuant to an agreement it made with Defendant Association, affiliated the Ritz Carlton Club, Aspen Highlands with Marriott Vacation Club affiliation/exchange/points program.

94. Plaintiffs allege on information and belief that sometime in 2014, in contravention

of the promises made to Class Members on April 5, 2013 (that Defendants’ unsold inventory of fractionals “will not be sold through the Marriott Vacation Club trust without an additional vote of the Members”), Defendant MVW, pursuant to an agreement it made with Defendant Association not to enforce Section 19.8 of Declaration of Condominium for Aspen Highlands Condominiums, sold a portion of its remaining unsold Ritz-Carlton Club inventory to the Marriott Vacation Club trust.


95. The actions of the Defendants described above were knowingly made in violation of their respective duties of loyalty owed to Plaintiffs and Class Members, as well as in violation of Section 19.8 and other provisions of the Declaration of Condominium for Aspen Highlands Condominiums, as well as the promises made to Plaintiffs and Class Members between April 5 and April 8, 2013 that unless a majority of Aspen Highlands Fractional Unit owners and members vote in favor of doing so, Defendants would not include Ritz Carlton Club, Aspen Highlands or the Plaintiffs’ and Class Members’ Fractional Units in the Marriott Vacation Club affiliation/exchange/point program. The actions described herein violated and/or aided and abetted the violation of Defendants’ fiduciary duties owed to Plaintiffs’ and Class Members.

96. Now, approximately 400,000 Marriott Vacation Club members –– who paid a

small fraction of the purchase prices and who pay approximately a third of the annual fees –– have access to luxury resorts that were formerly only available to Plaintiffs and Class Members. Defendants have derived huge profits and/or cost savings through this affiliation, while devaluing Plaintiffs’ vested property interests. Worse yet, Plaintiffs have had to pay, in the form of inflated annual maintenance fees, for the increased use and wear and tear resulting from the opening of the Ritz Carlton Club, Aspen Highlands to Marriott Vacation Club Members.

V. CLASS ACTION ALLEGATIONS

97. Pursuant to Rule 23(b) of the Colorado Rules of Civil Procedure, Plaintiffs bring this action on behalf of themselves and the following proposed class:

All entities and individuals (including their assignees) who, at any time from January 1, 2001 to the present, purchased a 1/12 fractional interest in the Ritz-Carlton Aspen Highlands development.

98. Excluded from the proposed class are Marriott Vacations Worldwide Corporation;

Marriott Ownership Resorts, Inc., d/b/a Marriott Vacation Club International; Ritz Carlton Development Company, Inc.; Ritz-Carlton Management Company, LLC; Cobalt Travel Company, LLC; Aspen Highlands Condominium Association, Inc.; Aspen Highlands Tourist Accommodation Board; The Lion & Crown Travel Co., LLC; any affiliate, parent, or subsidiary of any Defendant or Ritz Carlton Development Company, Inc.; any entity in which any Defendant or Ritz Carlton Development Company, Inc. has a controlling interest; any officer, director, or employee of any Defendant or Ritz Carlton Development Company, Inc.; any successor or assign of any Defendant or Ritz Carlton Development Company, Inc.; anyone employed by counsel in this action; any judge to whom this case is assigned, his or her spouse; and members of the judge’s staff.

99. Members of the proposed class are readily ascertainable because the class

definition is based upon objective criteria. 100. Numerosity. Defendants sold over 800 1/12 fractional interests in the Ritz-

Carlton Aspen Highlands development from 2001 to the present. Members of the proposed class


are thus too numerous to practically join in a single action. Class members may be notified of the pendency of this action by mail, supplemented by published notice (if deemed necessary or appropriate by the Court).

101. Commonality and Predominance. Common questions of law and fact exist as to all proposed class members and predominate over questions affecting only individual class members. These common questions include whether:

a. Defendants Association, RC Management, and Cobalt owed fiduciary duties to

Class Members; b. Defendants Association, RC Management, and Cobalt were the agents and/or sub-

agents of Plaintiffs and Class Members as a result of certain written agreements and/or by operation of law

c. Defendants, including MVW, MVCI, Association, RC Management and Cobalt,

aided and abetted any breaches of fiduciary duties owed to Class Members; d. Defendants, including MVW, MVCI, Association RC Management and Cobalt

conspired with other Defendants to breach fiduciary duties owed to Class Members;

e. Any breaches of fiduciary duty, or aiding and abetting such breaches, caused a

diminution in value of the Class Members’ Fractional Units and if so, by how much;

f. Any Defendant was unjustly enriched by the conduct described herein, and if so,

by how much; g. Plaintiffs and Class Members are entitled to damages, including compensatory or

statutory, and the amount of such damages; h. Plaintiffs and Class Members are entitled to equitable relief, including restitution

or injunctive relief; i. Plaintiffs and Class Members are entitled to an award of reasonable attorneys’

fees, pre-judgment and post-judgment interest, and/or costs of suit. 102. Typicality. Plaintiffs’ claims are typical of the claims of the proposed class.

Plaintiffs and the members of the proposed class all purchased 1/12 fractional interests in the Ritz-Carlton Aspen Highlands development, giving rise to substantially the same claims.

103. Adequacy. Plaintiffs are adequate representatives of the proposed class because

their interests do not conflict with the interests of the members of the proposed class they seeks


to represent. Plaintiffs have retained counsel competent and experienced in complex class action litigation, and will prosecute this action vigorously on class members’ behalf.

104. Superiority. A class action is superior to other available means for the fair and

efficient adjudication of this dispute. The injury suffered by each Class Member, while meaningful on an individual basis, is not of such magnitude as to make the prosecution of individual actions against Defendants economically feasible. Even if Class Members themselves could afford such individualized litigation, overseeing hundreds of individual actions would overburden the court system.. In addition to the burden and expense of managing many individual actions arising from Defendants’ conduct, individualized litigation presents a potential for inconsistent or contradictory judgments. Individualized litigation increases the delay and expense to all parties and the court system presented by the legal and factual issues of the case. By contrast, a class action presents far fewer management difficulties and provides the benefits of single adjudication, economy of scale, and comprehensive supervision by a single court.

105. In the alternative, the proposed class may be certified because:

a. the prosecution of separate actions by the individual members of the proposed

class would create a risk of inconsistent adjudications, which could establish incompatible standards of conduct for Defendants;

b. the prosecution of individual actions could result in adjudications, which as a

practical matter, would be dispositive of the interests of non-party class members or which would substantially impair their ability to protect their interests; and

VI. CAUSES OF ACTION

FIRST CAUSE OF ACTION (Breach of Fiduciary Duty Against Association, RC Management, and Cobalt)

106. Plaintiffs and Class Members incorporate by reference the allegations contained

in the preceding and subsequent paragraphs, as if fully set forth in this cause of action. 107. Defendants Association, RC Management, and Cobalt owed fiduciary duties to

Plaintiffs and Class Members arising both out of their agency (or sub-agency) relationship with the Plaintiffs and Class Members, as well as by virtue of said Defendants’ high degree of control over Plaintiffs’ and Class Members’ Fractional Units and had a duty to act with the utmost good faith and loyalty in the best interests of Plaintiffs and Class Members.

108. These Defendants breached this duty by advancing their own interests and the

interests of third parties, including the interests of MVW and MVCI, at the expense of Plaintiffs’ and Class Members’ interests, by agreeing to act and acting in a disloyal manner towards Plaintiffs and Class Members and by favoring the interests of the Defendants over the interests of


the Plaintiffs and Class Members through inclusion of the Ritz-Carlton Club, Aspen Highlands Fractional Plan and the Plaintiffs’ and Class Members’ Fractional Units in the Marriott Vacation Club affiliation/exchange/points program; and 2) agreeing not to and failing to enforce the Declaration, including the covenant against further timesharing, as set forth in paragraph 19.8 of the Declaration and/or by failing to act as a reasonably prudent fiduciary would have acted under the same or similar circumstances.

109. Defendants Association and RC Management owed Plaintiffs and Class Members

a fiduciary duty that required them to, among other things, enforce the restrictive covenants of the Declaration, including Section 19.8 thereof, as well as section 8.25 of the Declaration for Aspen Highlands Village. These Defendants failed to enforce Section 19.8, Section 8.25 and other provisions, thereby breaching their fiduciary duty, by: (1) failing to enforce these restrictive covenant against timesharing, as set forth in Section 19.8 and Section 8.25; and/or (2) imposing and/or conspiring with the other Defendants to impose the affiliation of the Marriott Vacation Club affiliation/exchange/points program with the Ritz-Carlton Club, Aspen Highlands Fractional Plan and the Plaintiffs’ and Class Members/ Fractional Units,

110. Defendants Association, RC Management and Cobalt also owed Plaintiffs and

Class Members a fiduciary duty of loyalty arising both out of their respective agency (or sub-agency) relationship with the Plaintiffs and Class Members, as well as by virtue of their high degree of control over Plaintiffs’ and Class Members’ Fractional Units and Cobalt’s exclusive control of Plaintiffs and Class Members’ rights under the appurtenant Ritz-Carlton Club Membership Program.

111. The fiduciary duties described herein required that Defendants Association, RC

Management and Cobalt act in the best interests of Plaintiffs and Class Members, which includes refraining from any actions that would unjustly enrich themselves or their affiliates at the expense of the value of the Fractional Units that Plaintiffs and Class Members purchased. These Defendants breached that duty by, inter alia, imposing, allowing and/or conspiring with the other Defendants to impose the affiliation of the Marriott Vacation Club affiliation/exchange/points program with the Ritz-Carlton Club, Aspen Highlands Fractional Plan and the Plaintiffs’ and Class Members/ Fractional Units.

112. Defendants Association, RC Management and Cobalt breached these fiduciary

duties by advancing their own interests and the interests of third parties, including the interests of MVW and MVCI, at the expense of Class Members’ interests, in allowing the affiliation of the Marriott Vacation Club affiliation/exchange/points program with the Ritz-Carlton Club, Aspen Highlands Fractional Plan and the Plaintiffs’ and Class Members/ Fractional Units.

113. As a result of Defendants’ breach of fiduciary duties, Plaintiffs and Class

Members suffered damages, including the destruction of the value in their fractional units, in an amount to be proven at trial.


114. As a result of Defendants breach of fiduciary duties, Defendants profited at Plaintiffs and Class Members’ expense. Defendants should be ordered to forfeit to Plaintiffs and Class Members all profits Defendants received as a result of the conduct described herein; and that a constructive trust be imposed upon said profits for the benefit of Plaintiffs and Class Members.

SECOND CAUSE OF ACTION

(Aiding and Abetting Breach of Fiduciary Duty Against All Defendants)

115. Plaintiffs and Class Members incorporate by reference the allegations contained in the preceding, and subsequent paragraphs, as if fully set forth in this cause of action.

116. Defendants and each of them, including MVW, MVCI and L & C aided and

abetted the breaches of fiduciary duty by Defendants Association, RC Management and Cobalt. 117. As described above, Association, RC Management, and Cobalt owed fiduciary

duties to Plaintiffs and Class Members. 118. As described above, Association, RC Management and Cobalt breached their

fiduciary duties to Plaintiffs and Class members. 119. Defendants, including MVW, MVCI and L & C knowingly aided and abetted and

participated in the breaches of fiduciary duty by, inter alia, participating in further timesharing (prohibited by, inter alia, Section 19.8 of the Declaration of Condominium for Aspen Highlands Condominiums and Section 8.25 of the Declaration for Aspen Highlands Village) and by participating in, intermeddling, forcing and otherwise improperly influencing the decision by Cobalt and the other Defendants to affiliate the Marriott Vacation Club and with the Ritz Carlton Club, Aspen Highlands and with Plaintiffs’ and Class Members’ Fractional Units, despite promises made to Plaintiffs and Class Members that such affiliation would not occur without a vote by the Plaintiffs and Class Members.

120. Defendants’ aiding and abetting the breach of fiduciary duties alleged herein has

caused damage to Plaintiffs and Class Members, including the destruction of the value in their fractional units, in an amount to be proven at trial.

121. As a result of Defendants aiding and abetting of the breach of fiduciary duties

described herein, Defendants profited at Plaintiffs and Class Members’ expense. Defendants should be ordered to forfeit to Plaintiffs and Class Members all profits Defendants received as a result of the conduct described herein; and that a constructive trust be imposed upon said profits for the benefit of Plaintiffs and Class Members.


THIRD CAUSE OF ACTION (Conspiracy Against All Defendants)


in the preceding and subsequent paragraphs, as if fully set forth in this cause of action. 123. Defendants, and each of them, conspired with the remaining Defendants’ scheme

to commit the wrongful and unlawful conduct alleged herein. 124. As described in detail above, MVW, MVCI and L & C, in furtherance of their

own financial gain, conspired with Defendants Association, RC Management and Cobalt in breaching their fiduciary duties by agreeing to the affiliation of the Ritz-Carlton Club, Aspen Highlands and Plaintiffs’ and Class Members’ Fractional Units with the Marriott Vacation Club, in violation of promises made by Defendants both in April 2013, in the Affiliation Agreement, and in the Declaration of Condominium at Aspen Highlands.

125. All Defendants agreed on an object to be accomplished – the affiliation of the

Ritz-Carlton Club, Aspen Highlands and Plaintiffs’ and Class Members’ Fractional Units with the Marriott Vacation Club. There was a meeting of the minds among all Defendants on that object. The Defendants, working together, accomplished the unlawful overt act of aiding and abetting the Association, RC Management, and/or Cobalt in breaching their fiduciary duties to Plaintiffs and Class Members by participating in said affiliation, in violation of promises made by Defendants in April 2013, the Affiliation Agreement, and the Declaration of Condominium at Aspen Highlands.

126. As a proximate result, Plaintiffs and Class Members suffered damages, including

the destruction of the value in their fractional units, in an amount to be proven at trial. 127. As a result of Defendants conspiracy to breach of fiduciary duties described herein,

Defendants profited at Plaintiffs and Class Members’ expense. Defendants should be ordered to forfeit to Plaintiffs and Class Members all profits Defendants received as a result of the conduct described herein; and that a constructive trust be imposed upon said profits for the benefit of Plaintiffs and Class Members.


in the preceding and subsequent paragraphs, as if fully set forth in this cause of action.

129. Defendants acted in a wrongful manner, unfairly causing detriment to Plaintiffs and Class Members.

130. Defendants, and each of them, conspired with and aided and abetted each other in

achieving a unilaterally imposed affiliation with the Marriott Vacations Club, in order to rid themselves of a poor financial investment with the Ritz-Carlton Club, to increase the attractiveness, value and price of MVC timeshares sold by the MVW and MVCI through the


affiliation with the Ritz Carton Club Aspen Highlands, as well as to increase exchange fees payable to Cobalt and L & C, despite knowing that such an affiliation would devalue Class Members’ Fractional Units, while at the same time making Marriott Vacation Club Destinations more attractive, valuable and expensive, all to the unjust enrichment of Defendants, including but not limited to MVW, MVCI, Cobalt and L & C.

131. Under these circumstances, it would be unjust for Defendants to retain the benefit

and ill-gotten profits they made without commensurate compensation to Class Members. As such, Plaintiffs and Class Members request that the Court impose a constructive trust for the benefit of Plaintiffs and Class Members, on all profits Defendants received as a result of the conduct described herein.

RESERVATION OF RIGHTS

132. Plaintiffs and Class Members expressly reserve all rights accorded under Colorado law, including but not limited to the right to amend this pleading as may be necessary in light of new or additional factual information gathered throughout the disclosure and discovery phases of this litigation and the right to plead exemplary damages in accordance with C.R.S. § 13-21.102.

JURY DEMAND

Plaintiffs demand a trial by jury for all issues so triable.

PRAYER FOR RELIEF

WHEREFORE, Plaintiffs and Class Members pray for relief as follows:

a. That the Court determine that this action may be maintained as a class action

under Rules 23(a), 23(b)(2), and (b)(3) of the Colorado Rules of Civil Procedure, that Plaintiffs be certified as class representatives and Plaintiffs’ counsel be appointed as counsel for the Class;

b. That Plaintiffs and Class Members recover damages, as provided by law,

determined to have been sustained as to each of them; c. That Defendants RC Management, Cobalt and L & C forfeit and repay to

Plaintiffs and Class Members all compensation paid to them by Plaintiffs and Class Members;

d. That Defendants forfeit to Plaintiffs and Class Members all profits Defendants

received as a result of the conduct described herein; and that a constructive trust be imposed upon said profits for the benefit of Plaintiffs and Class Members;


e. That Plaintiffs and Class Members receive pre-judgment and post-judgment

interest as allowed by law; f. That Plaintiffs and Class Members recover their costs of the suit, and attorneys’

fees as allowed by law; and g. For all other relief allowed by law and equity.

DATED this 26th day of April, 2016. Respectfully submitted,

LAW OFFICE OF MICHAEL J. REISER /s/ Michael J. Reiser____________ Michael J. Reiser, # 16161 961 Ygnacio Valley Road Walnut Creek, CA 94596 Telephone: (925) 256-0400 Facsimile: (925) 476-0304 E-mail: [email protected]

THE MATTHEW C. FERGUSON LAW FIRM, P.C.

__________________________________ Matthew C. Ferguson, #25687 119 South Spring, Suite 201 Aspen, Colorado 81611 Telephone: (970) 925-6288 Facsimile: (970) 925-2273 E-mail: [email protected]

Michael L. Schrag (CA SBN 185832) GIBBS LAW GROUP LLP (Motion for Pro Hac Vice Admission to be Filed) 1 Kaiser Plaza, Suite 1125 Oakland, CA 94612 Telephone (510) 350-9718 Facsimile: (510) 350-9701 Telephone (510) 350-9718 Facsimile: (510) 350-9701 E-mail: [email protected]

Tyler R. Meade (CA SBN 160838) (Motion for Pro Hac Vice Admission to be filed) THE MEADE FIRM P.C. 1816 Fifth Street Berkeley, CA 94710 Telephone (510) 843-3670 Facsimile: (510) 843-3679 E-mail: [email protected] Attorneys for Plaintiffs

mailto:[email protected]:[email protected]:[email protected]:[email protected]


Plaintiffs’ Addresses: RCHFU, LLC 2323 Broadway Oakland, CA 94612 Jeffrey A. Bayer and Gail L. Bayer 2222 Arlington Avenue Birmingham, AL 35205 Robert Buzzetti 411 N.E 25th Avenue Fort Lauderdale, FL 33308 Julie C. Canner 2000 Town Center, Suite 1500 Southfield, MI 48075 Lee James Chimerakis and Theresa Ann Chimerakis 3801 PGA Blvd. Suite 700 Palm Beach Gardens, FL 33410 Kevin Clare and Nancy Lynne Shute 818 Sixth Street Manhattan Beach, CA 90266 Toby L. Cone Trust and Toby L. Cone 17 Morehouse Lane Norwalk, CT 06850 Richard David and Shirley J. Davis 107 Creek Side Lane Houston, TX 77024 Carl Eichstaedt, III 917 Highview Ave Manhattan Beach, CA 90266 James Richard Farquhar and Jennifer Lucille Farquhar 342 Condailly Street Gunnedan, NSW 2380 Australia Koppelman Family Trust and Larry Koppelman, its trustee


135 Santo Tomas Lane Santa Barbara Ca. 93108. David Lancashire and Stephen Andrews 5080 Spectrum Drive, Suite 320W Addison, TX 75001 6415 Desco Dr. Dallas TX 75225 David Lancashire 6415 Desco Dr. Dallas TX 75225 Bonnie Likover 593 Piney Point Houston, TX 77024 Craig Lipton 1138 Taylor Street San Francisco, CA 94108 Jeremy Lowell, D.D.S. and Lori Lowell 2345 Juniper Hill Road Aspen, CO 81611 Edward P. Meyerson and Andrea C. Meyerson 420 20th Street North, Suite 1400 Birmingham, AL 35203 Jerry M. Nowell Trust and Jerry M. Nowell, its Trustee, and Dee Ann Davis Nowell Trust and Dee Ann Davis Nowell, its Trustee 6511 East Monterosa Street Scottsdale, AZ 85251 Thomas M. Prose Revocable Living Trust and Thomas M. Prose, M.D its Trustee 21333 Haggerty Road, Suite 150 Novi, MI 48375 Casey M. Rogers and Courtney S. Rogers 2115 Forest Drive East Charlotte, NC 28211


Robert A. Sklar Trust, and Robert A. Sklar , its Trustee 26650 Woodlore Road Franklin, MI 48025 D.Richard Stasney, M.D. and Susan P. Stasney 6550 Fannin Street, Suite 2025 Houston, TX 77030 D. Richard Stasney, M.D. 6550 Fannin Street, Suite 2025 Houston, TX 77030 TSE HOLDINGS, LLC 601 Rio Grande Place #120 Aspen, CO 81611 Stephen Weinstein and Brenda Weinstein 17069 Brookwood Drive Boca Raton FL, 33496 Jack Zemer 4330 La Jolla Village Dr., Suite 100 San Diego, CA 92122 4815-4260-8945, v. 1

COLORADO · 2019. 2. 19. · 9. Beginning in 2013 and continuing through the 2014, Defendants MVW,...

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